- 22 Oct
Comparing Overdraft Funding Levels to Invoice Finance, Invoice Discounting & Factoring
For some time we have been seeking figures that will demonstrate statistically the increased levels of funding that invoice finance, factoring and invoice discounting release over and above that which is available through traditional bank overdraft lending facilities.
We conducted some research amongst SME (Small and Medium Sized Businesses) and we asked them firstly if they had an overdraft and secondly if the proportion of their outstanding sales ledger that their overdraft represented. Of those that had an overdraft, the funding provided represented an average of just 2.6% of their outstanding sales ledger. As an example, according to that average a business with an outstanding sales ledger of £100,000 might expect to raise £2,600 through a traditional overdraft.
Looking at the ABFA invoice finance statistics for the second half of this year, pure invoice finance advances represented some 42% of debtor outstandings amongst the clients of members of the ABFA. Using the same example business, this would equate to £42,000 raised through invoice finance against the same sales ledger.
This demonstrates the increased amount of funding that can be released using invoice finance over and above that provided by bank overdraft facilities.